Making social science accessible

20 Jan 2017


UK-EU Relations


The pharmaceutical industry contributes significantly to the British economy. The Association of the British Pharmaceutical Industry (ABPI) estimates it is the third most important sector in the UK economy, with a trade surplus of £2.8 billion. The UK-based pharmaceutical industry directly employs 73,000 people – 23,000 in research and development. All top ten global pharmaceutical companies operate in the UK.

Immediately after the EU referendum result, the value of the pharmaceutical industry increased. Pharma is a relatively safe investment in uncertain times: after all, national health services don’t stop ordering life-saving medicines during crises. But the big pharma companies supported Remain.

What happens medium term depends on the post-Brexit legal and institutional arrangements. Information is distinctly light. ‘Brexit means Brexit’ tells us no more than the UK will have a relationship with the EU based on international trade law, rather than EU law. It’s not possible, therefore, to be definitive at present about the effects of Brexit on the pharmaceutical industry.

One of the most complete yet succinct summaries of possible post-Brexit futures, in terms of trade relations, is in Japan’s message to the UK and EU, issued in September 2016.  The following of its requests are important to the pharmaceutical industry:

  • Continuing to harmonise and mutually recognise product standards. This is the most important issue for ABPI and the Bioindustry Association. Currently, pharmaceuticals with an authorisation from the European Medicines Agency (EMA) can be marketed anywhere in the EU. If the UK’s future relationship with the EU does not include that regulatory system, access to the UK market will be subject to an additional regulatory process. Faced with a choice of access to a market of patients in the whole of the EU, or the UK, pharma companies will act rationally and choose the EU, or at least the EU first. And it isn’t only EU product marketing standards that give access to the whole EU market. A new EU-wide clinical trials system will come into force soon, giving single approval for clinical trials anywhere in the EU.
  • Securing the location within the UK of the EMA. This is, frankly, not going to happen. The EMA will be relocated. France, Germany, Spain and the Netherlands are reported to be keen to host the agency. Benefits to the UK regulatory authority of proximity with the EMA will be lost.
  • Unified protection of intellectual property rights. The industry relies on trade-marks, and associated rights, to protect its property (and to some extent to secure patient safety). These are currently covered by EU law. Their future is dependent on what type of future trade relationship is secured. A Norway-type arrangement will mean less legal disruption; falling back on ordinary international trade agreements means more. Patent law is different: the European Patent Office is separate from the EU. A country in the EPO system need not be a member of the EU. The UK may also be able to secure participation in the EU’s hard-won Unitary Patent System, which is yet to enter into effect.
  • The UK’s access to the EU budget for research and development should continue. The UK is a net beneficiary from the EU’s research funding initiatives, and a significant proportion of these is in life-sciences research. Again, whether the UK participates in Horizon 2020 and other EU research collaborations depends on the future UK-EU relationship. Beyond the immediate industry, blue skies research in UK universities and spin-off companies is deeply threatened by Brexit. The industry is seeking reassurance from the government that its industrial strategy will continue to offer significant support to life sciences research. But an austerity-driven government may not be able to deliver.

These requests by Japan to the UK are also key:

  • Companies continue to access workers with necessary skills. The pharmaceutical industry depends on skilled labour. Being within the EU allows scientists from other EU countries, and their families, to relocate without visas. EU law secures social protections such as education entitlements for their children, or pensions. Without this openness, it will be significantly more difficult for companies in all sectors to recruit from the EU.
  • Keeping current levels of information protection, and the free transfer of data, if the UK establishes its own data protection legislation distinct from the EU’s. Clinical trials, post-marketing safety information, ‘big data’ research – all depend on securing lawful transfer of patient/participant data. Post Brexit, the UK will have to agree human-rights compliant data transfer arrangements with the EU and other countries.

The further the post-Brexit arrangements depart from the current arrangements, the more challenging for the future of the UK pharmaceutical industry. Pharma is a global industry. Capital can move relatively quickly to other jurisdictions if trading circumstances become less appealing. And pharma is not an area where the UK can compete globally by significant deregulation: it won’t be politically acceptable to risk a future Thalidomide scandal through lowering regulatory standards.

What happens to the pharmaceutical industry is also deeply entwined with other policy areas. The sector is currently massively reliant on non-UK EU nationals, on direct EU funding and the indirect funding that follows it, and of course on access to capital investment. As Mike Thomson, CEO of ABPI, put it in June 2016

“We need to convince the rest of the world to come to Britain. We have to make sure we put our best foot forward to convince the rest of the world and global pharma that Britain is a great place to bring new medicines to market even when we leave the EU.”

But whether the rest of the world will be convinced depends on the post-Brexit arrangements for labour migration; access to Horizon 2020, and to future research and development funding; and movement of capital into the UK.  The ‘Norway option’ may be best for pharma, but Norway has already signalled that this may not be available. What may be desirable for the UK pharmaceutical industry may prove politically impossible.

By Professor Tamara Hervey, University of Sheffield


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